My cousin borrowed $15,000 for a new car loan for 5 years. He told me that at the end of the loan, he had paid $21,000 for the interest and principal. What was the rate of the loan? A. 7% B. 8% C. 9% D. 10%

2 Answers
Jun 20, 2018

I got 8%

Explanation:

I interpreted the question like this:

The total interest payed will be:

$21,000-$15,000=$6000

that gives each year:

($6,000)/5=$1,200

we use a proportion to write it in terms of %:

$15,000:$1200=100%:x%

rearrange:

x%=(cancel($)1,200*100%)/(cancel($)15,000)=8%

Jun 20, 2018

The answer is none of the choices you listed. But if we were to keep going down of doing the same process, it would be 40% of the loan rate.

Explanation:

7% interest

7/100=0.07
15,000*0.07=1,050
15,000+1,050=16,050

8% interest

8/100=0.08
15,000*0.08=1,200
15,000+1,200=16,200

9% interest
9/100=0.09
15,000*0.09=1,350
15,000+1,350=16,350

10% interest
10/100=0.10
15,000*0.10=1,500
15,000+1500=16,500

So it really none of the selected choices you listed.

So if we were to keep doing of listing percentages, we eventually found out that:

40% interest
40/100=0.40
15,000*0.40=6,000
15,000+6,000=21,000